Eastern Property Holdings Limited (EPH) : Third Quarter 2013 Trading Update

GlobeNewswire

Road Town, Tortola, BVI

FINANCIAL HIGHLIGHTS

  • RUB strengthening against US$ during the 3rd quarter of 2013 slightly mitigates the negative effect of exchange rate fluctuations reflected in the Company`s Interim Unaudited Financial Statement as of 30 June 2013. Though, the overall net FX loss of $7.01 million as of 30 September 2013 has substantial adverse effect to the Company`s Net Profit and NAV.

  • Nevertheless, assuming unchanged real estate values (based on the valuations done as of 31 May 2013), strong performance of wholly-owned and minority-held rental assets would result in NAV slightly higher than at 31 December 2012.

ASSET UPDATE

Arbat 1:

  • Construction is advancing according to plan;

  • Completion of commercial part of the building (i.e. excluding equipment and fit-out of the Theatre part) is scheduled for the end of 2013;

  • The apartments are already in the market; marketing strategy has been developed and is being implemented.

  • First agreement on the sale of two apartments has been signed. The payment is expected by year-end.

Arbat 2:

  • Completion of underground works and start of aboveground works is scheduled for December 2013.

Arbat construction financing:

  • External loan facility of up to $ 30 mln at 10% interest per annum has been signed in September 2013. As of 30 September $2.85 million was drawn down.

Petrovsky Fort:

  • Decreased vacancy rate (below 5% as of 30 September) led to moderate increase of gross rent by 5% YoY.

Magistral`naya

  • Gross rent has increased by 3% and net rent by 17% YoY.

Inkonika Parking:

  • Income from hourly parking increased by app. 70% starting from the beginning of the year; income from short-term and mid-term contracts with companies and individuals also demonstrates a positive trend.

Geneva House:

  • Fully leased.

Berlin House:

  • Fully leased.

Significant financial events and changes for Q3 2013 are as follows:

INCOME

Rental Income
In the nine months ended 30 September 2013, our wholly-owned rental properties generated Gross Rental Income of $5.81 million and Net Rental Income of $5.61 million.

On a Like for Like basis, due to reduced vacancies at Petrovsky Fort and annual indexation of rent at Magistral`naya the Gross Rental Income of the Company is up by 5% ($5.81 million vs $5.56 million in 3q 2012). In fact, until 2013 the staff working for Petrovsky Fort was employed by Valartis and the respective costs were covered by the management fee which was included in the Net Rent calculation. Starting from 2013 those employees are hired by Petrovsky Fort and the respective salary expenses are reflected as Administartive expenses and, therefore, are not included in the Net Rent calculation. Further, the improved operating efficiency at both Petrovsky Fort and Magistral`naya has resulted in a 32% increase in Net Rental Income ($5.61 million vs $4.25 million in the first nine months of 2012).

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